Discussion Paper Details
Please find the details for DP14431 in an easy to copy and paste format below:
Title: What's Wrong with Fiscal Space?
Author(s): Charles Wyplosz
Publication Date: February 2020
Keyword(s): Counter-cyclical fiscal policy, Fiscal space and intertemporal budget constraint
Programme Area(s): Macroeconomics and Growth and Monetary Economics and Fluctuations
Abstract: The concept of fiscal space, often discussed in European policymaking circles, is intuitively appealing but fraught with daunting challenges. In principle, it is meant to indicate how expansionary fiscal policy can be in the short run given longer term concerns. The proper basis should be the intertemporal budget constraint, but that is not what the Commission does. This paper suggests how to use the constraint to evaluate the fiscal space. Instead of aiming at a single number (with or without confidence intervals) it transparently links the computation of the fiscal space to explicit assumptions about the unknown future.
For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=14431
Wyplosz, C. 2020. 'What's Wrong with Fiscal Space?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=14431